Bitcoin (BTC) becomes rarer every time it undergoes a halving, but the next event in the next four days will make the digital asset twice as rare as gold, says an analyst at major cryptocurrency exchange Bybit. say:
A report on what to expect before and after the Bitcoin halving suggests that the supply of BTC will be tight after the event, as all centralized exchange reserves could be consumed within nine months. It became clear.
Twice as rare as gold
Bybit said Bitcoin's stock-to-flow (S2F) model backs up its claims, as indicators show that BTC becomes rarer than gold with each halving. The S2F ratio is calculated by dividing a commodity's circulating supply by its annual production, yielding a measure of scarcity.
As of this writing, Bitcoin's S2F ratio is hovering around 56, while gold's S2F ratio is 60. After the halving, Bitcoin's ratio is expected to double to 112.
A halving would slow down the production rate of BTC, slowing down the supply, and a tight supply may be inevitable. Bitcoin is already showing early signs of a short squeeze, and it will only get worse after the halving.
The supply of BTC to Spot Bitcoin Exchange Traded Funds (ETFs) typically comes from centralized exchanges as investors realize profitable positions and miners sell block rewards. When mining rewards are reduced and investors keep their assets in cold storage or decentralized wallets, miners are discouraged from selling quickly, reducing the sell-side supply flowing into exchanges.
complex cycle
Approximately 2 million Bitcoins are currently held in centralized exchange reserves. Assuming $500 million in daily inflows to the Spot Bitcoin ETF, approximately 7,142 BTC would flow out of the exchange reserves each day, indicating that the reserves would only last 9 months after the halving.
“With this in mind, it is not surprising that the price of Bitcoin could continue to rise before and even after the halving, as tight supply pushes prices to new records. No,” Byvitt said.
Halvings are known to cause a rise in Bitcoin prices, but analysts see this cycle as complex and, with Bitcoin already hitting new highs, the impact of future events remains uncertain. remains unclear. Some believe that the post-halving rally will not be as pronounced as the market has experienced after past events.
Nevertheless, market experts believe that demand will drive a surge in BTC post-halving this time around as spot Bitcoin ETFs reach their full potential.
